lifting the veil on trust arbitrage: the annual growth miracle

wen:founder macro ren zeping, lu liang


2007-2016 years of trust industry to achieve 9 years, more than 20 times the expansion of the miracle, the annual compound growth rate as high as nearly 40%! as of the first half of 2017, the asset management scale of trust industry reached 23 trillion and 140 billion, ranking second in the entire asset management industry, second only to the scale of bank financing 28 trillion and 400 billion, ranked first in the three musketeers(trust, brokerage information management and fund subsidiary).how does the trust industry carry out supervision arbitrage? with the convening of the central financial work conference, financial deleveraging, information management, unified regulatory new rules and so on, the future of the trust industry go from here? what's the impact on the economy and the stock market?


trust funds mainly rely on loans and financial assets investment, mainly invest in basic industries, real estate, securities markets and other fields.the rapid expansion of trust industry is related to economic development and supervision during the period.from the way of looking at the use of funds, loans accounted for 37.9% of the available for sale and held to maturity investment accounted for 26.5%, investment of trading financial assets accounted for 14%, long-term equity investments accounted for 8.3%, inter-bank deposits accounted for 4.5%, the top five accounted for 91.2%; from the amount of funds, funds mainly invest in basic industries, real estate, securities market financial institutions and industrial and commercial enterprises in five major areas, accounted for 15.8%, 9%, 14.4%, 19.7%, 26.2%, accounted for 85.1% of total.

silver trust cooperation:channel business, investment in real estate and local financing platform, regulatory arbitrage brewing risk and lead to clean up and rectify.1) the rapid development of trust scale benefits from the"silver trust cooperation"mode, the channel business bypassing supervision, financing for real estate and infrastructure particular, by the end of 2008 launched the"four trillion stimulus plan", the local government, real estate enterprises and industrial and commercial enterprises have strong financing needs, for the silver letter cooperation business explosive development provides a golden december 4, 2008, china banking regulatory commission issued the guidelines for business cooperation between banks and trust companies, which meant that banks' financing funds were granted through the trust channel, which was approved by the regulatory letter of cooperation regulatory arbitrage model is:on the one hand, the trust company engaged in the channel business basically do not need to invest much resources, just let the commercial banks borrow the trust channel business, trust company is equivalent to the net profit of the channel cost, but also rely on bank resources quickly expand the scale of assets.on the other hand, the route through the trust channel of commercial banks can not only have more investment channels, but also to avoid regulation, will be in the form of assets transferred to the table, rapidly expand the size of the total assets of.2) the channel of cooperation between banks and banks brings great risks:first, evading supervision and risk accumulation; two, bypassing the restriction of credit policy, affecting the effect of macro control.3) therefore, the supervision department has issued a number of regulatory measures for the cooperation between banks and august 5, 2010, the cbrc issued the"norms on financial cooperation business related matters notice", requirement:financing business accounted for the balance of financial cooperation business balance ratio should not exceed 30%; commercial banks should be strictly in accordance with the requirements of the sheet assets transferred in the next two years in the table, and in accordance with the 150% provision coverage requirements provision, while large banks should be in accordance with the 11.5%, 10% small and medium-sized banks in accordance with the required capital adequacy ratio of provision of august 24, 2010, the cbrc promulgated the trust company's net capital management measures, which stipulates that the net capital of the trust company shall not be less than rmb 200 million yuan, the net capital shall not be less than 100% of the sum of venture capital, and the net capital shall not be less than 40% of the net assets.subsequently, the rapid development momentum of the cooperation between banks and letters has been curbed.

umbrella trust:for the stock market to increase leverage, triggered the stock market the bull market of 2014-2015 years, the trust company provides the otc allocation service through umbrella trust, and each sub unit of the umbrella trust introduces the product structure of inferior/preferred share.highly leveraged transactions spawned a stock market bubble, regulators in the first half of 2015 to clear otc leverage with capital, the second half of the"crash", frequent explosion march 18, 2016, china banking regulatory commission issued the"opinions on further strengthening the risk supervision of trust companies"to the banking regulatory bureaus, which stipulated that the proportion of structured capital leverage should not exceed 1:1, the highest is not more than 2:1, compared with the previous 3:1 in the industry, there is an obvious compression.

securities management and fund subsidiary rise:comprehensive financial liberalization and regulatory competition, split trust channel cake.2012 is the starting point in the information management industry explosive growth regulators, the full liberalization of the channel business, the csrc promulgated and implemented the"customer asset management business of securities companies management approach"and"securities investment fund management subsidiary management interim provisions"and other laws and regulations, to allow securities companies, fund subsidiaries to carry out asset management business.securities information management and fund subsidiary replicated the rapid development path of trust in the past 2008-2010 years, making full use of regulatory dividends, to achieve explosive growth.the trust company is in a disadvantageous position in the competition due to its stricter supervision.the most obvious is that the trust company will be restricted by net capital after august 2010, while the securities management and fund subsidiaries do not.the latter can lower the channel business rate with low capital cost and erode the market share of the trust.

financial leverage to promote regulatory upgrading.the contradiction between mixed operation and separate supervision has become more and more deep.since the second half of 2016, the central government has concentrated on the introduction of policy financial deleveraging, and the cbrc in april 2017the

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